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Defense Leaders Check Progress on Efficiencies Initiatives

By Jim GaramoneAmerican Forces Press Service

WASHINGTON, Sept. 23, 2010  Defense Secretary Robert M. Gates met with top civilian and military leaders here yesterday to discuss progress on the Defense Department's efforts to reduce overhead costs and promote efficiencies. The group included the ten combatant commanders who lead the nation's operational military.

“It is absolutely critical in our view that the [combatant commanders] be involved in shaping all aspects of these initiatives, especially those that affect military capabilities, missions and their organizations,” Gates said today at a Pentagon news conference. “Their contributions yesterday reflect their important role in our efforts.”

The secretary said he wants to ensure that those responsible for executing these changes and reforms “be involved in developing both options and recommendations.”

The efficiencies initiatives are a team effort, Gates said, designed to instill a culture of savings and restraint. Military and civilian leaders, he added, must buy into the program for it to be successful.

“These leaders recognize the need to shift resources from overhead to real military capabilities,” he said. “They believe in the specific measures we have announced and are committed to implementing them and further developing our plan. We must all make every dollar count to ensure that our military has the forces and capabilities needed in a dangerous world.”

Gates cited efficiencies for the fourth lot of the F-35 joint strike fighters built by Lockheed-Martin as an example of what he’s trying to do. “After extensive negotiations, the department has reached an agreement to use a fixed-price incentive fee contract for the purchase of 30 F-35s for the U.S. military,” the secretary said. The contract also includes an aircraft for the United Kingdom and another for the Netherlands.

The contract, Gates added, shares the cost of overruns between the government and industry up to a fixed ceiling. It also shares the rewards when the programs come in under cost. “The per-unit price we’ve negotiated for this new contract is 15 to 20 percent below the independent cost estimate for the F-35 prepared earlier this year,” the secretary said.

The contract as structured will enhance the productivity of the joint strike fighter program to reduce overall costs, Gates said, adding that he would like to see similar efforts for other procurements.

Gates said he has made it clear to the department's industry partners and defense contracting professionals that defense officials "need to see more of these types of contracts in order to provide more value and better programs for the American taxpayers and provide good business opportunities for our industrial partners."